03/08/2021
Creating investment alternatives in a region with high growth rates and that was off the radar of the fund industry made the founders of Cedro Capital choose Central Brazil as their area of operation. In 2013, when the manager was created, almost two-thirds of Venture Capital funds were allocated to São Paulo, followed by Rio de Janeiro and Southern states. “The Midwest corresponded to about 10% of the national GDP, but at that time it didn’t have even 1% of Brazil’s Venture Capital and Private Equity money” explains Bruno Brito, Managing Director of the company.
Given the opportunity, Cedro Capital over these 7 years has developed financial products for institutional investors in the Midwest, Tocantins and Minas Gerais, besides offering the opportunity for regional diversification. Since 2016, when the first fund was launched, the company has made 11 investments and sold stakes in two startups in the portfolio.
1. Four years after the launch of the first fund, what opportunities still exist in Central Brazil?
There is already a good critical mass of technology companies and good entrepreneurs developing interesting businesses in the region. That is why we are here, to help in the development of these businesses.
Innovation is always connected to workforce training, so we seek to be close to research centers and accelerators. There are excellent universities in the Central Brazil region and the entrepreneurs that come out of them look at the geography around them. In Brasília, there is a great supply, for example, of information technology startups, because the government consumes a lot of this.
2. Where are the main innovation clusters in this region?
There are several innovation clusters in this region. Brasilia is, without a doubt, one of them. Uberlândia is an important center as well – Gira, whose departure was recently announced, is from there. Belo Horizonte, although not exactly understood as part of Central Brazil, is an important nearby center. Finally, another pole is Goiânia, where we have two companies invested today.
3. What is Cedro Capital’s fundraising strategy?
We are a multi-product manager, with a Venture Capital fund for startups in the region, an FIDC to anticipate performing credits of local productive chains, and a multi-market fund. Cedro’s core strategy reflects this positioning.
When you look at the Brazilian market and analyze the financial products available for institutional investors’ capital allocation, you come to the conclusion that more than 90% of the products are backed by assets from the Southeast region, especially the Rio-Sao Paulo axis. What we are doing is developing financial products and prioritizing it for local institutional investors, as well as offering the opportunity for those who want to diversify.
4. What sector (or sectors) of techs have the most room for growth and new business development in these states?
Information and Communication Technologies (ICTs), agribusiness, and healthcare are the main verticals in the region. In Anápolis, for example, there is one of the main pharmochemical poles in Brazil, and the presence of large pharmaceutical companies moves this chain in the health sector.
But we at Cedro are pretty sector agnostic. What we are looking for are good investment opportunities in technology and innovation companies. This is the drive of our investments. We look at various sectors: cloud computing, cyber security, tracking, internet of things, educational technologies, etc.
5. Cedro Capital recently sold its participation in Gira. What does this deal, closed with Santander, represent?
Gira was an important milestone not only for the fund but for the overall innovation ecosystem in Brazil, because for the first time a major bank acquired an agribusiness startup. I am absolutely sure that Gira, within Santander’s platform, will grow a lot. There is a lot of innovation and technology in there.
Source: ABVCAP News | September 2020
